In the wake of Covid-19, business survival planning has never been more important. If you're a small business owner that wants to give your venture its best possible chance of surviving, you need to start laying down the groundwork today. From cash flow management strategies to leadership advice, this guide highlights seven preventative survival tactics you can take to strengthen your business. We conclude by addressing some funding solutions at Kriya and answering some frequently asked questions.
Launching a business is no easy feat. Unfortunately, sustaining one is even harder. In the UK, 1 in 5 new businesses fails within their first year. And even after you've been trading for a while, it only takes one unexpected bump in the road to deter your hard-earned progress. While this has always been the case, the devastating impact of Covid-19 has bought this reality close to home for many business owners.
Sadly, there is no perfect way to predict what future crises may or may not derail your business. What's more, no business owner can be completely sure of navigating these circumstances once they arise. Despite this, you can take measures to make your business more resilient. Follow these seven steps to help your small-to-medium-sized enterprise (SME) increase its chances of survival throughout the pandemic and beyond.
7 STEPS TO HELP YOUR BUSINESS SURVIVE
1. Monitor your company’s cash flow
Are you confident your business will be able to survive future dry periods? How much emergency cash does it currently have on hand? If you can't answer these questions right now, you need to familiarise yourself with your business's cash flow.
Around 50,000 UK businesses go bust each year due to cash flow problems. Therefore, if you seriously want your SME to survive and thrive long into the future, you need to understand its figures today. By regularly monitoring revenue and expenditure like payroll, maintenance and rent, business owners can keep track of the financial health of their venture and make possible adjustments if necessary. This will offer you and your team precious peace of mind and lower the impact of bumps down the road, should they occur.
If you want to take things one step further, we recommend creating a cash flow forecast. A cash flow forecast is a plan that shows how much money your business is expected to receive and expend during a certain period. Business owners can use this planning method to predict how the enterprise might perform under a range of different conditions. It's also a useful tool for business owners looking to expand in the future. There's no rule for how long a cash flow forecast should be, but we advise looking around 6-12 months into the future to cover all bases.
2. Check in with your business plan
If you want to maximise your SMEs chances of survival, your finances aren't the only thing you should plan for. Business owners should also regularly check their business plans to ensure their current strategy aligns with their future goals. It's no secret that businesses' objectives change regularly, especially through a disruptive period like a pandemic.
So, by making amendments to your plan or chucking out the old one altogether and starting afresh, you can refocus your company's vision and start working to achieve these goals. Checking in or revising your business plan also ensures all of your team are on the same page moving forward. Not only will this create greater unity around your brand, but it'll also keep your staff focused on the top priorities of the business.
When adjusting or creating a new business plan, we recommend considering your short, medium, and long-term goals. As a general rule of thumb, your short-term goals should be achieved within around two or three months and can include things like sales targets and employee training.
Your medium-term goals should be achievable within a few months and are often dependent on the achievement of your short-term goals. They could include slightly larger changes to the company like premises relocation or switch to economies of scale. Finally, your long-term goals may take as much as ten years to be achieved and can include intentions like increasing your business's total income by a set amount.
When you’re revising or creating new goals for your enterprise, it’s important to make sure they are SMART: specific, measurable, achievable, relevant and timely. This way, it’s more likely your business will achieve what it set out to.
3. Network with other professionals
If you're a bit of a lone wolf in business, it may be time to switch up your strategy. While it's important to rely on your own judgement, networking is one of the most useful tools you can use to grow and develop your SME. By reaching out to other professionals in your industry, you can gain valuable insight, access new opportunities and seek advice on how to improve your business. Surrounding yourself with business owners in a similar position to you also gives you the chance to encourage each other and listen to each other's accomplishments and struggles. Expanding your professional network can also help raise your brand's profile. This can be particularly valuable for businesses that are new or are struggling to build brand awareness.
If you’re interested in connecting with other small business owners, there are many different routes to explore. One of the easiest ways to create new contacts is through social media. Depending on the scope of your business, social platforms like LinkedIn, Instagram and Twitter can be invaluable tools to reach out to individuals and build an online community. They also allow you to follow similar businesses in your field.
Another way to reach out to fellow professionals is joining small business associations. Industry-specific business associations like the Institute of Chartered Accountants, Chartered Insurance Institute and Institution of Civil Engineers host regular networking events. This allows you to connect to fellow experts in your trade and discuss topics that may affect the survival of your business.
4. Conduct competitor analysis
While it's important to maintain good business relationships with fellow business owners, watching their progress is also useful. Competitor analysis allows you to do just that. The practice helps you gain insight into your business rivals' products, services, and sales and understand their potential strengths and weaknesses. By gaining a more accurate overview of your competition, you can reflect on the successes of your own business, understand your market with greater clarity and set benchmarks for future growth. These outcomes are effective ways to improve your businesses chances of survival.
It may sound obvious, but the first step of conducting a competitor analysis is identifying your competitors. You can do this by searching online for your service or product and filtering results according to what you're looking for. You can also reach out to existing customers and ask them what other alternatives they have considered in the past. Don't create a list that's too exhaustive; around 5-15 direct and indirect competitors should be more than enough.
Once you’ve selected your chosen few, research their products, price, platform, and marketing strategy. By assessing these four main components, you can measure their model against yours and decide if your business should make any improvements.
5. Understand your customers
Knowing your competition is a useful way to get ahead, but understanding your consumer base is arguably more important. Since generating sales is the main purpose of any enterprise, business owners need to recognise what makes people buy their products or services. Without this knowledge, it's very hard to retain existing customers and appeal to new audiences. Therefore, understanding your customers' requirements is imperative if you want your businesses to survive and thrive long into the future.
If you cater to the B2B market, it may be useful to research your clients in greater depth. By identifying their team's size, annual turnover, and the number of outlets, you can generate a profile of their business and use it to discover businesses with similar needs. You can reach out to your clients directly by email, telephone, or social platforms like LinkedIn to gather this information. Alternatively, you can use publicly available data from company websites, company databases or market research reports.
If you run a B2C business, one of the best ways to understand your customer base is consumer research. If you're interested in the numbers, you can use technology to conduct quantitative research. Using tools like online surveys, polls, and questionnaires, you can collect valuable data to guide your company's future consumer strategy. If it's more detailed findings you're after, you can conduct qualitative research by hosting focus groups or one-to-one interviews.
6. Be willing to adapt
When Covid-19 upended the business landscape as we knew it, SMEs had to adapt to survive. From welcoming remote working to managing supply chain chaos, quick thinking was required from business owners across all industries. Now, almost two years into the crisis, flexibility remains one of the biggest assets a business can have. So, to be prepared for any potential curveballs that might come your way, your business needs to be as flexible and open to change as humanly possible.
There are many different ways your enterprise can be flexible. By tracking emerging trends in your industry, you can decide if it’s time to implement new working models, new software and hardware options, or ways of reaching customers. By conducting consumer research, you can review the relevance of your offerings.
Depending on the needs of your business, you could also look into alternative staffing strategies like onshore or offshore outsourcing. Finally, if demand for your trade is consistent, but you're still encountering cash flow issues, it may be time to reassess the price point of your products or services.
By regularly reassessing the needs of your SME and being willing to make changes where necessary, your business will be in a much stronger position than many.
7. Keep an emergency fund
Your business can get hit financially at any time. Therefore, one of the best ways to improve the resilience of your business is to store away an emergency fund. Aside from adopting a flexible mindset, keeping some cash in the reserves is the next best thing your business can do to prepare itself for incoming storms.
As the name suggests, the biggest use of an emergency fund is to protect yourself against emergencies. This could include security breaches, natural disasters or property damage. While business insurance normally covers most of these scenarios, you can’t always bank on compensation. So, by setting some funds aside, these surprises won’t have the power to stop you in your tracks.
Emergency funds also come in useful if your company encounters cash flow shortages. Every small business experiences financial difficulties from time to time. By keeping some cash on the backburner, you can ensure these shortages won’t be enough to threaten the survival of your SME.
If your business doesn’t currently have capital available, you don’t need to worry. You can save for an emergency fund by putting aside a percentage of your annual revenue, setting up an automated savings plan, or investing a small amount of every payment you receive.
SECURE A STRONGER FUTURE WITH KRIYA
Unless you have a crystal ball, you don't know what tomorrow will bring for your business. By following the seven techniques above, your business will have the best possible chances of surviving the unknown. However, if you're looking for some extra security, it may be worth considering alternative finance.
Kriya offers a range of cash flow solutions to businesses that have been excluded from traditional lenders. From invoice financing to recovery loan schemes, our flexible funding options are hassle-free and don't have any hidden fees. If you want to learn more about our offerings, learn more at Kriya website.
FREQUENTLY ASKED QUESTIONS (FAQS)
What is a business survival strategy?
A business survival strategy is different strategies business owners use to give their business the best chance of survival. Some business survival strategies include regularly monitoring your company's cash flow, checking in with your business plan, building a network of other business owners, conducting competitor and consumer research, adopting a flexible mindset and keeping cash reserves on hand.
What are the key factors for business survival?
Due to the unique needs of each business, each venture depends on a slightly different set of factors for survival. However, some key factors that help most businesses succeed include a strong team, an innovative and unique idea, a high quality of product or service, a robust network of professionals and most importantly, a promising return on investment (RoI). How do you keep a business afloat in 2022?
After a turbulent two years for UK businesses, business leaders are finally looking towards a post-pandemic future. To help your business survive in 2022, it needs to be as adaptable as possible, prioritise customer service, harness digital technologies like augmented reality (AR) and the internet of things (IoT), have a strong social media presence, and consider selling products online.
How can you track your business’s finances?
If you want to keep track of your business's finances, you need to create a cash flow forecast. A cash flow forecast is a plan that shows how much money your business is expected to receive and expend during a certain period. Business owners can use this planning method to predict how the enterprise might perform under a range of different conditions. There's no rule for how long a cash flow forecast should be, but to cover all bases, we advise that it should look around 6-12 months into the future.
How do you network with other business owners?
One of the easiest ways to create new contacts is through social media. Depending on the scope of your business, social platforms like LinkedIn, Instagram and Twitter can be invaluable tools to reach out to individuals and build an online community. They also allow you to follow the work of similar businesses in your field. Another way to reach out to fellow professionals is joining small business associations.
How do you conduct competitor analysis?
It may sound obvious, but the first step of conducting a competitor analysis is identifying your competitors. You can do this by Googling your service or product and filtering results according to what you're looking for. You can also reach out to existing customers and ask them what other alternatives they have considered in the past. Once you've selected your chosen few, research the products or services they are providing, the price they are charging, the platform they choose to trade on, and how they are marketing their brand.
How can your business become more resilient?
One of the best ways to improve the resilience of your business is to store away an emergency fund. Aside from adopting a flexible mindset, keeping some cash in the reserves is the next best thing your business can do to prepare itself for incoming storms. You can save for an emergency fund by putting aside a percentage of your annual revenue, setting up an automated savings plan, or investing a small amount of every payment you receive.